Principles for good governance- it’s easier said that defined. We all know it to be a critical element to successfully manage a project portfolio. Ideally, your organisation should be able to make right decisions concerning your project quickly, which good governance assists with. Conversely, poor governance can lead to project delays, communication breakdown and increased risk exposure. Here’s pmo365’s 8 principles for good governance:
Defining Good Governance
Governance has many different definitions in different fields. Though we may be discussing the phrase in terms of project management, the concept of has more universal roots than just when applied to the project management field.
The Australian Institute of Company Directors suggests that “good governance is the framework that ensures the organisation can meet its mission.” Simplistically, good governance is having a good decision making and implementation process.
Therefore, a key principle of good governance is forming a clear framework. Ideally, this should define priorities and establish clear communication lines are critical.
But governance needs to go beyond simply establishing processes and meeting compliance requirements.
Read more: Project Governance
The United Nations suggests that good governance has 8 principles. We’re going to expand on each of them based on our experience in project management. Here’s pmo365’s principles for good governance.
The 8 Principles of Good Governance
Principle 1: Participatory Governance
Good governance considers different perspectives both inside and outside of the boardroom. Governing bodies can fall into a ‘groupthink’ when frameworks and decisions are created without a diversity of perspectives and opinions.
Groupthink occurs when individuals value group consensus over critical reasoning and evaluation. In these echo chambers, key decision-makers within the governance committee may not receive external perspectives and critiques that can improve processes.
It’s an easy fix. By promoting a collaborative approach to decision making, your organisation can follow the first principle for good governance.
Principle 2: Consensus Oriented
Encouragement participation across an organisation is a great first step, but it’s not always enough. Managers should make an effort to acknowledge all opinions offered- our second principle for good governance.
It’s easy for us to be uncomfortable with a diversity of perspectives, or perceive them as a point of conflict. However, when an organisation genuinely values their employee’s input, a culture where differences are respected and constructive intrinsically follows. When a diverse board reaches a consensus, it is likely to better serve the broader interests of stakeholders.
Principle 3: Accountability
Accountability can refer to the responsibility of an organisation to provide an explanation for its actions. However, clear accountability in an organisation encourages clean and quick decision-making. Establishing clear lines of command ensures issues are escalated to the right people in the most appropriate manner. Good governance results when individuals know exactly what they are responsible and accountable for at all times.
Principle 4: Transparency
Transparency refers to the willingness of an organisation to provide information to stakeholders. If good governance is relies on unity, then transparency is the critical factor to enable that across an organisation.
Internally, transparency ensures employees work in alignment with strategic objectives of the organisation. This contributes to all employees understanding their role within the organisation, and therefore, their value.
Externally, transparency is becoming increasingly important as stakeholders expect organisations to amp up their social, economic, and environmental efforts. Transparency is critical to build trust in an organisation and its brand.
Principle 5: Responsiveness
As stated in the outset, the result of good governance is making better decisions faster. A key principle for good governance, therefore, is responsiveness. This ensures your organisation keeps up with turbulent economic and corporate environments. Organisations that have proper governance structures in place are able can to respond to changes in a timely and effective manner. They can do this without leaving out critical stakeholders, instead ensuring all relevant parties are in the loop.
Principle 6: Effectiveness and Efficiency
Perhaps the most obvious principle for good governance is focussing on efficiency and effectiveness. Ideally, you should streamline processes to reduce the time and resources spent scrambling for solutions. This will optimise the use of resources, and accommodates the needs of stakeholders with ease.
Many organisations can become consumed with achieving efficiency in their processes. However, the efficiency of processes is redundant if they do not contribute to the strategic objectives of the organisation. This focus renders governance into a mere cost-saving technique rather than a strategic function.
So, consider this principle for good governance with nuance. Efficiency is only wonderful when it does not jeopardise the effectiveness of an organisation’s processes.
Read more: Organisational Governance Explained
Principle 7: Equity and Inclusivity
We can easily brand governance as rules and regulations without a moral dimensions. So, the connection between governance and social and environmental responsibility may not be immediately obvious. Realistically, governance plays a critical role in future business strategy. Equity and inclusivity are more than bringing people to the table. It is about executives ensuring that decisions consider the wellbeing of involved stakeholders, particularly the most vulnerable groups.
Good governance enables organisations to balance the conflicting needs of different stakeholders and interests to achieve the most equitable solution with the most inclusive practices possible.
Principle 8: Follows Rule of Law
Compliance contributes significantly to good governance. It requires organisations to abide by and implement fair legal frameworks that can be enforced impartially. As environmental and social compliance requirements continue to grow, you may consider bringing in third-party expertise to ensure your organisation is acting ethically, honestly, and with integrity.
Take your governance activities to the next level
Want to take your organisations governance maturity to the next level? Make sure to download our free Organisational Governance Maturity Checklist to better evaluate your current position and identify opportunities for growth.
If you want to continue to deep dive into the topic of governance, make sure to check out our blog and extended posts such as the 7 Elements of Good Organisational Governance and the Top 5 Signs of Poor Governance.